Despite historically high interest rates and limited inventory, the New York City luxury real estate market continues to thrive, driven by heightened demand from affluent buyers. Market reports from prominent real estate brokerages in New York reveal a robust increase in luxury property transactions. According to Compass’s third-quarter report, the number of contracts signed for homes with price tags of $20 million or more has surged by an astonishing 300% year-over-year. Concurrently, luxury property deals have increased by 23.6% on a quarterly basis, according to Douglas Elliman.
Notably, many of these significant transactions are occurring in penthouses and large apartments, often within the off-market realm. Compass broker Ian Slater, commenting on this trend, explained, “This is because, at the top of the market, the buyers are insulated from interest rates; most purchase properties with all-cash deals or secure financing against other assets. Additionally, there is an extremely limited supply.”
Compass found that properties priced within the $5 to $10 million and $10 to $20 million ranges experienced only minor declines of 1.9% and 2.6%, respectively, compared to the previous year.
In line with Slater’s insights, the inventory of ultra-luxury properties witnessed a 7% decrease from the previous year, marking the most significant drop in any price category. This scarcity of supply has precipitated a surge in home prices. The median price for a Manhattan home currently stands at $1.17 million, marking a 2% increase from the figures reported in 2022, according to Corcoran. In the uppermost 10% of the market, the median luxury home price registers at $6 million, reflecting a substantial 4.3% upswing from the prior year.
Coldwell Banker Warburg president, Frederick Warburg Peters, anticipates minimal changes in the market during the fourth quarter. He noted that buyers, grappling with elevated interest rates and inventory shortages, are discerning and cautious, waiting for the right opportunity at the right price. This selectiveness might extend the timeline for their decision-making process, possibly stretching to a year or more. As more individuals return to their offices, the appeal of owning a city home continues to recover.
Meanwhile, Bloomberg has reported a renewed interest from foreign home buyers in Manhattan. Overseas purchasers are increasingly drawn to exciting new developments throughout the city, while domestic buyers exhibit a degree of hesitance and await developments from the sidelines. Corcoran agent Kane Manera highlighted the evolving market dynamics: “We’re undoubtedly at a turning point, and you can sense a change in the air. If further geopolitical shifts favor the United States and the dollar plateaus or other currencies strengthen, it could trigger a significant surge in demand.”